Automatic Increases
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In keeping with the legal term "national average wage index," we often loosely refer
to the basis for the index as average wages. To be more precise, however, the index
is based on compensation (wages, tips, and the like)
subject to Federal income taxes, as reported by employers on Form W-2.
Beginning with the AWI for 1991, compensation includes contributions to deferred
compensation plans, but excludes certain distributions from plans where the
distributions are included in the reported compensation subject to income taxes.
We call the result of including contributions, and excluding certain distributions,
net compensation.
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